8-KOther EventsExhibits & Filings

Duke Energy CORP 8-K Report, Corporate Update (Jun 2, 2020)

Filed June 2, 2020For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Progress, LLC (DEP), a subsidiary of Duke Energy Corp. (DUK), has reached a partial settlement with the Public Staff – North Carolina Utilities Commission (NCUC) regarding its general rate case. This settlement primarily addresses the recovery of Deferred Storm Costs associated with Hurricanes Florence, Michael, Dorian, and Winter Storm Diego. Notably, DEP will withdraw its direct request for cost recovery in this rate case and instead pursue a securitization financing order for these costs within 120 days of the NCUC's order on the matter. A recovery rider for these costs will be established, initially set at zero, with provisions for DEP to seek recovery outside of a general rate case if securitization fails. The partial settlement excludes key items such as coal ash recovery, return on equity, capitalization structure, depreciation rates, grid improvement plans, and Excess Deferred Income Tax (EDIT) balances. This means these significant aspects will be subject to further deliberation and potential dispute within the NCUC's proceedings. The stipulation is contingent upon approval from the NCUC, and additional details are available in Exhibit 99.1.

Key Highlights

  • 1Duke Energy Progress (DEP) reached a partial settlement with the NCUC Public Staff regarding its rate case.
  • 2DEP will remove its request to recover Deferred Storm Costs directly in the current rate case.
  • 3DEP intends to file for a securitization financing order for Deferred Storm Costs within 120 days post-NCUC order.
  • 4A recovery rider for Deferred Storm Costs will be established at an initial rate of $0.
  • 5DEP reserves the right to seek recovery of Deferred Storm Costs outside a general rate case if securitization is unsuccessful.
  • 6Key issues like coal ash recovery, ROE, and capitalization structure remain unsettled.
  • 7The partial settlement is subject to approval by the North Carolina Utilities Commission (NCUC).

Frequently Asked Questions

Deferred Storm Costs refer to the expenses incurred by Duke Energy Progress (DEP) in responding to and recovering from significant weather events, specifically Hurricanes Florence, Michael, Dorian, and Winter Storm Diego. These costs would typically be included in a utility's rate request to be recovered from customers over time.

Securitization financing allows a utility to issue bonds to recover certain costs (like storm costs) upfront. These bonds are typically repaid over time through a non-bypassable rate rider collected from customers. This method can provide faster recovery for the utility and potentially lower immediate costs for customers compared to traditional rate recovery methods, though the overall cost to customers depends on market conditions at the time of issuance.

The partial settlement explicitly excludes several important financial and operational matters, including: coal ash recovery, return on equity (ROE), capitalization structure, depreciation rates, the grid improvement plan, and the return of unprotected Excess Deferred Income Tax (EDIT) balances. These will be decided through further proceedings at the NCUC.

The recovery rider being set at $0 initially signifies that customers will not see an immediate increase in their bills specifically for these storm costs as part of this partial settlement. The actual recovery mechanism will depend on the success of the planned securitization financing or a subsequent regulatory filing if securitization fails.